Chapter 9 Organizational Agility

Question 1

Discuss why it is critical for organizations to be responsive.

Answer 1

Organizations have a formal structure to help control what goes on within them. But to survive today, firms need more than control—they need responsiveness. They must act quickly and adapt to fast-changing demands.

The formal structure is put in place to control people, decisions, and actions. But in today’s fast-changing business environment, responsiveness—quickness, agility, the ability to adapt to changing demands—is more vital than ever to a firm’s survival.

Question 2

mechanistic organizationとは

organic organizationとは

Answer 2

mechanistic organization: A form of organization that seeks to maximize internal efficiency.

organic structure: An organizational form that emphasizes flexibility.

The organic structure can be described as follows:

1. Jobholders have broader responsibilities that change as the need arises.
2. Communication occurs through advice and information rather than through orders and instructions.
3. Decision making and influence are more decentralized and informal.
4. Expertise is highly valued.
5. Jobholders rely more heavily on judgment than on rules.
6. Obedience to authority is less important than commitment to the organization’s goals.
7. Employees depend more on one another and relate more informally and personally.

昔はmechanistic organizationの方が主流だったけど最近はorganic organizationの方が主流

Question 3

Describe the qualities of an organic organization structure.

Answer 3

The organic form emphasizes flexibility. Organic organizations are decentralized, informal, and dependent on the judgment and expertise of people with broad responsibilities. The organic form is not a single formal structure but a concept that underlies all the new forms discussed in this chapter.

• Core competencies
• Its strategic alliances
• Its ability to learn
• Its ability to engage all the people in the organization in achieving its objectives.

Managers who want to strengthen their firms’ competitiveness via core competencies need to focus on several related issues:

1. Identify existing core competencies.
2. Acquire or build core competencies that will be important for the future.
3. Keep investing in competencies so that the firm remains world class and better than competitors.
4. Extend competencies to find new applications and opportunities for the markets of tomorrow.

strategic alliance: A formal relationship created among independent organizations with the purpose of joint pursuit of mutual goals.

Companies form strategic alliances to develop new technologies, enter new markets, and reduce manufacturing costs. Not only can alliances enable companies to move ahead faster and more efficiently, but they also are sometimes the only practical way to bring together the variety of specialists needed for operating in today’s complex and fast-changing environment. Rather than hiring the experts who understand the technology and market segments for each new product, companies can form alliances with partners that already have those experts on board.

例）AppleとStarbucksが提携

learning organization: An organization skilled at creating, acquiring, and transferring knowledge, and at modifying its behavior to reflect new knowledge and insights.

How do firms become true learning organizations? There are a few important ingredients.

1. Their people engage in disciplined thinking and attention to details, making decisions based on data and evidence rather than guesswork and assumptions.
2. They search constantly for new knowledge and ways to apply it, looking for expanding horizons and opportunities rather than quick fixes to current problems. The organization values and rewards individuals who expand their knowledge and skill in areas that benefit the organization.
3. They carefully review both successes and failures, looking for lessons and deeper understanding.
4. Learning organizations benchmark—they identify and implement the best business practices of other organizations, stealing ideas shamelessly.
5. They share ideas throughout the organization via reports, information systems, informal discussions, site visits, education, and training. Employees work with and are mentored by more-experienced employees.

high-involvement organization: A type of organization in which top management ensures that there is consensus about the direction in which the business is heading.

The leader seeks input from his or her top management team and from lower levels of the company. Task forces, study groups, and other techniques are used to foster participation in decisions that affect the entire organization. Also fundamental to the high-involvement organization is continual feedback to participants regarding how they are doing compared with the competition and how effectively they are meeting the strategic agenda.

Question 4

Firm’s sizeの重要性

Answer 4

Historically, large organizations have had important advantages over small organizations. Today, small size has advantages, including the ability to act quickly, respond to customer demands, and serve small niches. The ideal firm today combines the advantages of both. It creates many small, flexible units, while the corporate levels add value by taking advantage of its size and power.

One of the most important characteristics of an organization—and one of the most important factors influencing its ability to respond effectively to its environment—is its size. Large organizations are typically less organic and more bureaucratic（官僚的、お役所的な）.

In large organizations, jobs become more specialized. More distinct groups of specialists get created because large organizations can add a new specialty at lower proportional expense. The complexity created by these numerous specialties makes the organization harder to control. As a result, in the past management added more levels to keep spans of control from becoming too large. To cope with complexity, large companies tend to become more bureaucratic. Rules, procedures, and paperwork are introduced.

Thus, with size comes greater complexity, and complexity brings a need for increased control. In response, organizations adopt bureaucratic strategies of control. The conventional wisdom is that bureaucratization increases efficiency but decreases a company’s ability to innovate.

でかい会社は①engine of economic growth throuout 20th century

②scale economies (lower costs per unit of production)

③低コストを提供する事が出来る（例：Walmart)

④economies of scope：Economies in which materials and processes employed in one product can be used to make other, related products.

小さい会社は性能重視。

Smaller companies can move fast, provide quality goods and services to targeted market niches, and inspire greater involvement from their people

Question 5

Explain how a firm can be both big and small.

Answer 5

As large companies attempt to regain the responsiveness of small companies, they often face the dilemma of downsizing. Downsizing is the planned elimination of positions or jobs. Common approaches to downsizing include eliminating functions, hierarchical levels, or even whole units.

Done appropriately, with inefficient layers eliminated and resources focused more on adding customer value than on wasteful internal processes, downsizing can indeed lead to a more agile, flexible, and responsive firm. In that case, downsizing can be called rightsizing—arrival at the size at which the company performs most effectively.

Question 6

survivor’s syndromeとは

Answer 6

Loss of productivity and morale in employees who remain after a downsizing.

リストラから生き残った後の過酷な重労働や次は自分がリストラされるんじゃないかというストレスによって苦渋する症状

Question 7

Summarize how firms organize to meet customer requirements.

Answer 7

Firms have embraced principles of continuous improvement and total quality management to respond to customer needs. Baldrige criteria and ISO 9001 standards help firms organize to meet better quality specifications. Extending these, reengineering efforts are directed at completely overhauling processes to provide world-class customer service.

Strategic triangle: Business unit must take into account three key players

1. the company itself
2. the competition
3. the customer.

Customer relationship management (CRM) is a multifaceted process, typically mediated by a set of information technologies, that focuses on creating two-way exchanges with customers so that firms have an intimate knowledge of their needs, wants, and buying patterns. In this way, CRM helps companies understand, as well as anticipate, the needs of current and potential customers. And in that way, it is part of a business strategy for managing customers to maximize their long-term value to an enterprise.

value chain: The sequence of activities that flow from raw materials to the delivery of a good or service, with additional value created at each step. Each step in the chain adds value to the product or service:

• Research and development focus on innovation and new products.
• Inbound logistics receive and store raw materials and distribute them to operations.
• Operations transform the raw materials into final product.
• Outbound logistics warehouse the product and handle its distribution.
• Marketing and sales identify customer requirements and get customers to purchase the product.
• Service offers customer support, such as repair, after the item has been bought.

One of the most effective ways to leverage an organization’s value chain is to bring together elements of the chain to collaborate to add customer value and build competitive advantage. For example, long-term relationships can be established with suppliers to encourage investment in new technologies and practices that speed product development and turnaround. Nike chooses its suppliers—what it calls its “strategic partners”—to that end and shares its business plans and strategies with them to reinforce close collaboration. Sales staff can communicate with operations staff, before the manufacturing process even starts, to develop products jointly that customers will value highly. Service managers can constantly report back to operations about defects and work with operations and suppliers to reduce and eliminate them. When managers create that type of collaboration, their organization’s agility and responsiveness increase significantly.

total quality management (TQM): An integrative approach to management that supports the attainment of customer satisfaction through a wide variety of tools and techniques that result in high-quality goods and services.

14 points of quality emphasized:

1. Create constancy of purpose—strive for long-term improvement rather than short-term profit.
2. Adopt the new philosophy—don’t tolerate delays and mistakes.
3. Cease dependence on mass inspection—build quality into the process on the front end.
4. End the practice of awarding business on price tag alone—build long-term relationships.
5. Improve constantly and forever the system of production and service—at each stage.
6. Institute training and retraining—continually update methods and thinking.
7. Institute leadership—provide the resources needed for effectiveness.
8. Drive out fear—people must believe it is safe to report problems or ask for help.
9. Break down barriers among departments—promote teamwork.
10. Eliminate slogans, exhortations, and arbitrary targets—supply methods, not buzzwords.
11. Eliminate numerical quotas—they are contrary to the idea of continuous improvement.
12. Remove barriers to pride in workmanship—allow autonomy and spontaneity.
13. Institute a vigorous program of education and retraining—people are assets, not commodities.
14. Take action to accomplish the transformation—provide a structure that enables quality.

One of the most important contributors to total quality management has been the introduction of statistical tools to analyze the causes of product defects, in an approach called Six Sigma Quality. The product defects analyzed may include anything that results in customer dissatisfaction—for example, late delivery, wrong shipment, or poor customer service, as well as problems with the product itself. When the defect has been identified, managers then engage the organization in a determined, comprehensive effort to eliminate its causes and reduce it to the lowest practicable level.

The influence of TQM on the organizing process has become even more acute with the emergence of ISO 9000 standards. ISO 9001 is a series of voluntary quality standards developed by a committee working under the International Organization for Standardization (known as ISO), a network of national standards institutions in more than 150 countries.

ISO 9001 sets standards of management that address eight principles:

1. Customer focus—learning and addressing customer needs and expectations.
2. Leadership—establishing a vision and goals, establishing trust, and providing employees with the resources and inspiration to meet goals.
3. Involvement of people—establishing an environment in which employees understand their contribution, engage in problem solving, and acquire and share knowledge.
4. Process approach—defining the tasks needed to successfully carry out each process and assigning responsibility for them.
5. System approach to management—putting processes together into efficient systems that work together effectively.
6. Continual improvement—teaching people how to identify areas for improvement and rewarding them for making improvements.
7. Factual approach to decision making—gathering accurate performance data, sharing the data with employees, and using the data to make decisions.
8. Mutually beneficial supplier relationships—working in a cooperative way with suppliers.

Effective reengineering can cut costs significantly

Question 8

Identify ways that firms organize around different types of technology.

Answer 8

Organizations tend to move from organic structures to mechanistic structures and back to organic structures as they transition from small batch to large batch and continuous process technologies. To organize for flexible manufacturing, organizations pursue mass customization via computer-integrated manufacturing and lean manufacturing. To organize for time-based competition, firms emphasize their logistics operations, just-in-time operations, and simultaneous engineering.

small batch: Technologies that produce goods and services in low volume.

When goods or services are provided in very low volume or small batches, a company that does such work is called a job shop. A fairly typical example of a job shop is PMF Industries, a small custom metalworking company in Williamsport, Pennsylvania, that produces stainless steel assemblies for medical and other uses. Less formally, in the service industry, restaurants or doctors’ offices are examples of job shops, because they provide a high variety of low-volume, customized services.

large batch: Technologies that produce goods and services in high volume.

As volume increases, product variety usually decreases. Companies with higher volumes and lower varieties than a job shop tend to be characterized as large batch, or mass production technologies. Examples of large batch technologies include the auto assembly operations of General Motors, Ford, and Chrysler. In the service sector, McDonald’s and Burger King are good examples. Their production runs tend to be more standardized, and all customers receive similar (if not identical) products. Machines tend to replace people in the physical execution of work. People run the machines.

continuous process: A process that is highly automated and has a continuous production flow.

People are completely removed from the work itself. It is done entirely by machines and/or computers. In some cases, people run the computers that run the machines.

Although issues of volume and variety often have been seen as trade-offs in a technological sense, today organizations are trying to produce both high-volume and high-variety products at the same time. This is referred to as mass customization. Automobiles, clothes, computers, and other products are increasingly being manufactured to match each customer’s taste, specifications, and budget. While this seemed only a fantasy a few years ago, mass customization is quickly becoming more prevalent among leading firms. You can now buy clothes cut to your proportions, supplements with the exact blend of the vitamins and minerals you like, CDs with the music tracks you choose, and textbooks whose chapters are picked out by your professor.

How do companies organize to pull off this type of customization at such low cost? As shown in Table 9.2, they organize around a dynamic network of relatively independent operating units. Each unit performs a specific process or task—called a module—such as making a component, performing a credit check, or performing a particular welding method. Some modules may be performed by outside suppliers or vendors.

computer-integrated manufacturing (CIM): The use of computer-aided design and computer-aided manufacturing to sequence and optimize a number of production processes.

flexible factories: Manufacturing plants that have short production runs, are organized around products, and use decentralized scheduling.

First, the traditional factory has long production runs, generating high volumes of a standardized product. Flexible factories have much shorter production runs, with many different products.

Second, traditional factories move parts down the line from one location in the production sequence to the next. Flexible factories are organized around products, in work cells or teams, so that people work closely together and parts move shorter distances with shorter or no delays.

Third, traditional factories use centralized scheduling, which is time-consuming, inaccurate, and slow to adapt to changes. Flexible factories use local or decentralized scheduling, in which decisions are made on the shop floor by the people doing the work.

lean(スリムな、採算のとれる） manufacturing: An operation that strives to achieve the highest possible productivity and total quality, cost effectively, by eliminating unnecessary steps in the production process and continually striving for improvement.

Lean manufacturing strives for high quality, speed, and low cost.

For the lean approach to result in more effective operations, the following conditions must be met:

• People are broadly trained rather than specialized.
• Communication is informal and horizontal among line workers.
• Equipment is general purpose.
• Work is organized in teams, or cells, that produce a group of similar products.
• Supplier relationships are long-term and cooperative.
• Product development is concurrent, not sequential, and is done by cross-functional teams.

time-based competition (TBC)：Strategies aimed at reducing the total time needed to deliver a good or service.

logistics（物資の全般的な管理法）：The movement of the right goods in the right amount to the right place at the right time.

just-in-time (JIT): A system that calls for subassemblies and components to be manufactured in very small lots and delivered to the next stage of the production process just as they are needed.

JIT represents a number of key production and organizational concepts, including the following:

• Elimination of waste. Eliminate all waste from the production process, including waste of time, people, machinery, space, and materials.
• Perfect quality. Produce perfect parts even when lot sizes are reduced, and produce the product exactly when it is needed in the exact quantities that are needed.
• Reduced cycle times. Accomplish the entire manufacturing process more rapidly. Reduce setup times for equipment, move parts only short distances (machinery is placed in closer proximity), and eliminate all delays. The goal is to reduce action to the time spent working on the parts. For most manufacturers today, the percentage of time parts are worked on is about 5 percent of the total production time. JIT seeks to eliminate the other 95 percent, that is, to reduce to zero the time spent not working on the parts.
• Employee involvement. In JIT, employee involvement is central to success. The workers are responsible for production decisions. Managers and supervisors are coaches. Top management pledges that there will never be layoffs due to improved productivity.
• Value-added manufacturing. Do only those things (actions, work, etc.) that add value to the finished product. If it doesn’t add value, don’t do it. For example, inspection does not add value to the finished product, so make the product correctly the first time and inspection will not be necessary.
• Discovery of problems and prevention of recurrence. Foolproofing, or fail-safing, is a key component of JIT. To prevent problems from arising, their cause(s) must be known and acted on. Thus, in JIT operations, people try to find the “weak link in the chain” by forcing problem areas to the surface so that preventive measures may be determined and implemented.

simultaneous engineering: A design approach in which all relevant functions cooperate jointly and continually in a maximum effort aimed at producing high-quality products that meet customers’ needs.